Wednesday, August 29, 2007
So the City bonus boys are getting even richer and company directors need wheelbarrows to take home the cash they've looted from their shareholders. It's a funny old world this Labour Britain, even funnier now that it's run by a supposedly old Labour Prime Minister. I have no general, ideological objections to people making large sums of money, but I have two specific objections to the bonus boys and their hedge fund pals. First, they seem to be borderline sociopaths, capable of wrecking once decent restaurants. Secondly, they - along with the non-doms who have flooded to London to exploit our tax haven status - have turned the central London property market into a semi-criminal casino; I speak from bitter experience. Company directors are just doing what they have always, in my experience, done - exploiting the supine complacency of shareholders. Of course, when challenged, all of these people will say this is simply the working of the market, evoking an amoral, though economically beneficial, abstraction lurking behind all their riches. They find this consoling because it appears to eliminate considerations of responsibility and justice. But it is nonsense. Politics is the real marketplace. For the success of London is nothing to do with any abstraction and everything to do with a political decision. Brown as Chancellor and, so far, as Prime Minister, has left the City alone and perpetuated our astonishingly generous tax regime for non-doms and company debt. Why has he - an old tax and spend socialist - done this? One answer that occurs to me is that, long ago, he decided that our best bet was to sustain our status as Europe's Hong Kong. This was made possible by our failure to accept the Euro and by Thatcher's labour market reforms. Unleashing our piratical financiers - and admitting plenty of overseas pirates - was the obvious way to exploit this. It has certainly worked; indeed, it has probably sustained Labour in power by underpinning more than a decade of economic success and, crucially for the middle classes, the reassuring spectacle of rapidly rising property prices. As long as you are a property owner, you are better off for Brown and the bonus boys. But, I suspect, as a policy its days are numbered. Social tensions caused by the wealth disparity between London and the rest of the country are emerging. The world financial system on which London depends is unstable. The Americans are not going to stand by much longer watching the City steal business from New York. And, finally, a debt-laden electorate must ultimately notice the oddity of Mr Social Justice quietly approving the creation of a casino economy. Brown will know this; what he won't know, however, is what will drive the economy when he closes the casino.
Posted by Bryan Appleyard at 6:41 am